Great Britain’s National Health Service is preparing to apply the first dramatic reforms to the program in decades, moving it toward a more consumer-focused system under Tory Prime Minister David Cameron’s Health and Social Care Bill.

Cameron’s proposal revamps the 63-year-old NHS, gutting the bureaucracy and giving doctors responsibility for deciding how most of the system's annual budget is spent. The new law will also allow more private health care companies to compete to provide services. According to the Department of Health, the plan will improve care and save as much as £1.7 billion (approximately U.S. $2.7 billion) a year.

The NHS has been hailed in romantic terms by health policy leaders such as Donald Berwick, a former consultant for the system and now head of the U.S. Centers for Medicare and Medicaid Services. Yet its outcomes for patients have been highly criticized, and in an era of cutbacks the NHS now takes up roughly 17.5 percent of the government’s budget—an expected £122 billion (about U.S. $194 billion) in 2011.

“Pretending that there is some easy option, of sticking with the status quo and hoping that a little bit of extra money will smooth over the challenges, is a complete fiction,” Cameron said in his Jan. 17 speech to the Royal Society of Arts in London announcing the plan. “Like every other Western industrialized nation, we won't sustainably live within our means with unreformed public services and outdated welfare systems.”

Failure of Central Planning

Devon Herrick, a senior fellow at the National Center for Policy Analysis, says European countries have realized centrally planned, state-run health care systems are going bankrupt just as the United States is moving in the opposite direction.

“In Britain and elsewhere in Europe, they are trying to infuse incentives into their health care markets through pay for performance. Meanwhile, here in the United States we’re doing the opposite—abandoning the free market in health care in favor of more government control of our health care system,” says Herrick.

Government Sytems ‘Tried and Failed’

Dr. Roger Stark, a physician and health care policy analyst at the Washington Policy Center, says nations under large budgetary burdens face a choice between slashing spending on brand-name pharmaceuticals and other services and increasing government rationing or passing burdensome taxes.

“England is running out of money, which is the end result of socialized medicine. Rather than ration care until there is taxpayer fatigue, they’ve decided to introduce some gradual free market reforms into the system,” explains Stark. “If they had any intention of sticking with their socialized health care, they would have simply raised taxes. The system is not working because it’s been stretched so thin and people are not receiving the treatment they want and need.”

This change will be “a revolutionary process,” Stark says.

“The fact that the Europeans have already tried government-run health care and failed does not bode well for our success at it,” said Herrick.